Key Tax Changes Under the One Big Beautiful Bill Act (OBBBA) – IN SHORT FORM

Rödl & Partner Tax Matters, Volume 2025-10, published July 7, 2025

Signed into law on July 4, 2025, the OBBBA introduces sweeping tax reforms, including permanent extensions of several TCJA provisions and new measures aligned with President Trump’s 2024 campaign platform. Below is a summary of the most relevant changes for businesses and individuals.

🔹 Business Tax Highlights

100% Bonus Depreciation Made Permanent: Full expensing of qualifying capital assets; transitional election for 40% or 60% expensing in 2025 if slower recovery preferred.
Manufacturing Real Estate Now Eligible: Bonus depreciation for facilities placed in service before 2031; excludes office/admin/sales areas.
Section 179 Expensing Increased: Limit raised to $2.5M; phase-out begins at $4M.
Business Interest Deduction: Returns to EBITDA-based limit; GILTI/Subpart F income excluded from ATI.
R&D Expensing Restored: Immediate expensing of domestic R&D; catch-up deductions in 2025 or, for small businesses, retroactive relief for 2022–2024.
Corporate Charitable Contributions: Limited to amounts exceeding 1% of taxable income.
Form 1099 Threshold Raised: Increased to $2,000 (indexed), effective 2025.
Advanced Manufacturing Credit Boosted: Increased to 35% for semiconductor investments after 2025.
Opportunity Zones Revived: New Qualified Opportunity Funds (2027–2033) with rural incentives.
New Markets Tax Credit: Permanently extended.
Paid Family & Medical Leave Credit: Extended and enhanced starting 2026.

🌍 International Tax Changes

Section 899 Removed: Proposed retaliatory tax dropped after G7 negotiations.
Foreign Tax Credit (FTC) Relief: Expense allocation rules eased for GILTI and Subpart F income.
GILTI & FDII Renamed and Reduced: GILTI becomes NCTI (40% deduction); FDII becomes FDDEI (33.34% deduction). Effective rates go from 13.125% to 14%.
BEAT Rate Fixed: Set permanently at 10.5%.
Downward Attribution Repealed: Section 958(b)(4) restored; introduces “foreign controlled foreign corporations.”
CFC Look-Through Rule: Made permanent.
Pro Rata Share Reform: Subpart F income allocated based on actual ownership period.

⚡ Energy Tax Changes

Clean Energy Credits Scaled Back: EV credit repealed; Section 45Y/48E credits phased out after 2027.
Credit Transfers Restricted: Transfers to foreign entities limited; some solar/wind credits eliminated.

👤 Individual Tax Changes

Tax Brackets Made Permanent: TCJA’s lower rates retained beyond 2025.
SALT Cap Raised: Increased to $40K ($20K separate filers), indexed through 2029.
QBI Deduction: 20% deduction made permanent; phase-in thresholds increased.
Excess Business Loss Limits: Permanently extended.
Standard Deduction: Made permanent and indexed. 2025: $31,500 (joint), $23,625 (HOH), $15,750 (single).
Senior Deduction: Temporary $6,000 deduction for taxpayers 65+, phased out at higher incomes.
AMT Relief: Higher exemption thresholds made permanent.
Child Tax Credit: $2,200 per child, with $1,400 refundable, indexed.
Mortgage Insurance: Permanently deductible.
Charitable Deduction for Non-Itemizers: Up to $1,000 starting in 2026.
Tips & Overtime Deduction: Up to $25K for tips, $12.5K for overtime (2025–2028).
Trump Accounts: New savings for children born 2025–2028; $1,000 government contribution.
1% Excise Tax: On personal remittances abroad.
Car Loan Interest Deduction: Up to $10K deductible (2025–2028); phased out at higher incomes.

🏛️ Estate Tax

Exemption Increased: $15M per individual starting 2026; indexed for inflation.

If you have questions about how these changes may affect your business or personal tax planning, please contact your Rödl & Partner representative.

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